Chapter 7- Management’s
Discussion and Analysis (MD&A)
Presented by Steve DeVetter
Partner – KPMG LLP
MD&A - What is it?
 Required supplementary information (RSI) which
precedes the audited financial statements
 Management’s opportunity to communicate key
financial activities of the Campus
 MD&A requirements
 Minimum and maximum requirements
 General rather than specific
 See “Guide to Preparation of MD&A” (Chapter 7,
Appendix 1) for discussion of required elements (GASB
34, par. 11)
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MD&A Overview
 Discussion of the basic financial statements
including the relationship of the statements to
each other
 Analysis of financial activities based on currently
known facts, decisions or conditions
 Discussion of current year results in comparison
with prior year, with emphasis on the current year
 Use of charts, graphs, and tables to facilitate
understanding of management’s analysis
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MD&A Overview (cont’d.)
 Focus of analysis should be on the Campus as
the primary reporting entity, with component
units (auxiliary organizations) included if
considered significant
 Reference to the component unit’s separately
issued financial statements, when appropriate
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MD&A Overview (cont’d.)
 Presentation of condensed financial information comparing
current year to prior year for each year presented
 Overall financial position and result of operations
 Description of significant capital assets and long-term debt
activity
 For comparative financial statements, must provide two-year
comparative analysis (i.e. 2004 vs. 2003 and 2003 vs. 2002)
 Description of currently known facts, decisions, or
conditions that are expected to have a significant financial
impact
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Preparation of MD&A
 “Guide to Preparation of MD&A” (refer to Chapter 7,
Appendix 1)
 Starting point – comprehensive variance analysis
 Identification of significant changes, and the reasons for
significant changes, from the prior year
 Coordination with appropriate Campus personnel to identify:
 Underlying causes for the changes
 Key decisions, transactions, events and conditions
 Expected changes, based on existing Campus decisions and
circumstances (i.e. known facts). Examples include:
 Changes in enrollment
 Campus master plan
 Debt
 New construction
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Preparation of MD&A (cont’d.)
 Completion of MD&A Checklist
 Helps ensure all required elements have been included in
the MD&A
 Review and approval signature by appropriate level of
management
 Other resource tools
 MD&A Resource Guide (refer to Chapter 7, Appendix 2)
 Pro-forma financial statements (refer to Chapter 12) one-year and comparative presentations
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MD&A – Highlights of Significant
Changes for 2004
 Year 3 under GASB 34
 Presentation of comparative financial statements – Must
provide “comparative” MD&A that includes:
 Comparative financial information and related analysis for both
years presented
 Three years of financial information (2004, 2003, and 2002)
 MD&A Checklist – to be completed by Campus and
provided to KPMG audit team along with draft MD&A
 Draft MD&A (approved by Campus management and
reviewed by KPMG) must be submitted to the Chancellor’s
Office by November 12, 2004
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QUESTIONS?
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